The Nigerian Federal Government is moving forward with plans to impose a five percent excise duty tax on mobile telephone services, fixed telephone, and internet services, despite recent claims by the Minister of Communications and Digital Economy, Isa Pantami, that the telecoms sector would be exempt. This proposed tax was initially suspended by the government in September 2022.
Minister Pantami stated that the Information, Technology and Communication (ICT) sector, particularly the telecoms industry, is already overwhelmed by excessive and multiple taxations that could adversely affect the sector if the government fails to take any precautions. The minister emphasized that the ICT sector has been the backbone of the Nigerian economy in terms of its contributions to the Gross Domestic Product and taxes collected by the Federal Inland Revenue Service.
Despite Pantami’s concerns, the government plans to proceed with the excise duty tax, which is expected to increase the cost of telecommunication services for Nigerians. The Federal Government, through the Budget Office of the Federation, previously announced its intention to implement this tax on telecommunication services and beverages in 2023.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, signed a circular on 20 April 2023 entitled ‘Approval for the Implementation of the 2023 Fiscal Policy Measures and Tariff Amendments,’ which outlined the new Fiscal Policy Measures for 2023. This circular indicated that President Muhammadu Buhari has approved the implementation of the 2023 Fiscal Policy Measures, including the excise duty tax on telecom services. The circular further states that the excise duty rate on mobile telephone services, fixed telephone, and internet services, both postpaid and prepaid, will be five percent.
Although Minister Pantami is against the implementation of this tax, the government’s circular indicates that the excise duty on telecom services will remain as approved by the President and published in the Official Gazette No. 88, Vol. 109 of 11th May 2022. This tax is expected to take effect on June 1, 2023, and will be applicable to both postpaid and prepaid services.